Bayer announces acquisition plans for Schiff Nutrition

Companies sign merger agreement, Bayer to acquire Schiff for $1.2 billion

Kelsey Kaustinen
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LEVERKUSEN, Germany—Bayer HealthCare LLC has announced thesigning of a merger agreement with Schiff Nutrition International, Inc., a SaltLake City-based company that offers nutritional supplements. Per the agreement,Bayer will acquire Schiff for $34 per share in cash, for an approximate totaldeal value of $1.2 billion. The transaction is subject to customary closingconditions, and is expected to close by the end of the year.
"Bayer is committed to augment its organic growth withstrategic bolt-on acquisitions. This transaction represents an excellentstrategic fit for our HealthCare business," Dr. Marijn Dekkers, CEO of BayerAG, said in a press release. "The Schiff business significantly enhances ourpresence and position in the United States, which accounts for moreover-the-counter and nutritional products sales than any other country in theworld."
Schiff's product portfolio includes core brands MegaRed,Move Free, Sustenex, Tiger's Milk, Digestive Advantage and Airborne. Thecompany "develops, manufactures, market, distributes and sells vitamins,nutritional supplements and sports nutrition products," with a presence in thejoint care, cardiovascular health and immune support health supplementsegments. The company has a staff of roughly 400 employees, with itsheadquarters and manufacturing site—the latter of which, a 418,000-square-footfacility, opened in 1997—located in Salt Lake City and additional offices inEmeryville, Calif.
"Schiff has a 75-year heritage of providing consumers withquality nutritional products," Tarang P. Amin, president and CEO of Schiff,said in a statement regarding the deal. "We are focused on building premiumbrands and leading innovation. We believe Bayer is well positioned to take ourleading brands to the next level."
For its fiscal year 2011, ended May 31, 2011, Schiffreported net sales of $213.6 million, up from the $204.9 million reported infiscal year 2010. Net income was $12.6 million, with earnings per diluted shareof $0.43. For Schiff's fiscal year 2012, ended May 31, 2012, net sales were$258.9 million, with a net income of $13.7 million and earnings per dilutedshare of $0.47. The company also released its outlook for 2013, forecastinggrowth in net sales of 43 percent to 46 percent compared to 2012 levels. InSchiff's most recent financial announcement, the company reported first quarternet sales for fiscal year 2013 of $85.1 million, up from the $58.2 millionreported in the same quarter of fiscal 2012. The company's branded sales wereup 49.3 percent to $74.8 million, thanks in part to the March 2012 acquisitionof Airborne, exceeding the $50.1 million posted in Q1 of fiscal year 2012. Netincome was $6 million, with earnings per diluted share of $0.20.
"We will utilize our extensive marketing, sales anddistribution expertise to further develop the strong brands we are acquiring,"Dr. Jörg Reinhardt, CEO of Bayer HealthCare, said in a press release. "We willalso look to leverage Schiff's new technology platforms with innovationpotential for other Bayer-owned brands and markets globally."
Other than noting that it expected the acquisition to"significantly strengthen [the] Consumer Care business of Bayer," the companyreleased no predictions as to the effects of the transaction or if any synergies are expected to result. No details were disclosed as to Bayer's plans forSchiff's facilities or employees.

Kelsey Kaustinen

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